Price of Iron Ore, page-74

Morning all.
no one knows if this is just the Chinese push to get IO lower, or the start of the move to the next bottom of the cycle.
if it’s the latter, producers like FEX quickly become uneconomical and go to care and maintenance. Our brilliant management have put that off for a year with the hedging. If IO keeps going lower then they might not pay a div, or if they do, it will be much smaller. Preservation of capital becomes vital. They might reduce output to cover the hedge and not much more. No sense mining stuff to sell at a loss. Keep it in the ground for the next up cycle.
if it is heading to bottom of the cycle, I’d strongly favour no div, as there will be some great distressed assets on the block eventually, that they can snap up cheaply. Cash will be king in that environment.
not saying that will happen, but it sure is a distinct possibility now.
with the cash they will have, I’m happy to keep backing our outstanding management.

cheers,

ned.